2 (a) GREENYARDS LTD 2001 2002 GP Ratio 255 51% 255 42% 500 610 NP Ratio 30 6% 25 4.1% 500 610 ROCE 30 14.6% 25 9.6% 205 260 Current Ratio 80 3.2:1 90 1.6:1 25 55 Quick Ratio 30 1.2:1 30 0.5:1 25 55 Stock Turnover – times 245 4.9 355 5.9 – days 50 74 60 62 Debtors Turnover – days 20x365 30x365 500 15 610 18 Any other relevant ratios acceptable 1 for each pair correctly calculated to maximum [12] (b) Greenyards’ GP, NP and ROCE ratios have worsened, whilst its current and quick ratios have improved – they were too high in 2001. Stock turnover is faster – good, provided it is not at the expense of profit – but debtors’ payments has lengthened which means that cash is slower coming in – not good, although it may encourage credit customers to continue buying from Greenyards. (Candidates should state whether the ratio is better or worse, and not just ‘up’ or ‘down’, as the ratios must be analysed.) Although Poynder’s GP ratio has worsened slightly, its NP ratio has improved, showing a better net profit for every $ of sales. Current ratio is at a reasonable level, but quick ratio looks as if it is improving. Stock turnover rate has, unfortunately, decreased, but this is counteracted by improved ROCE. 1 for each point to maximum [12] (c) Shortcomings and dangers of ratio analysis: (i) Requires a basis of comparison – one ratio on its own no use – must compare to, e.g., last year’s figures, other companies’...